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RT's
For those of you who do not have Squawk Box, days like today make it worth
while if for no other reason than it's occassional entertainment/educational
value. At about 2:10 EST, things got ugly as big locals suddenly started
canabalizing their weaker brethern, loading up on inventory for the post rate
cut rally (after AG's effect last time, it was a safe bet there would be some
sort of run to the upside, if for no other reason than short seller deja vu
terror). We are all aware of the headfakes before the real move, but this is
the first time I've been privy to the mechanics of it. All locals, no paper
was involved (this is not to say that I traded this fake; in fact, I had an
ideal trade identified at 1134, but pulled the limit order from PMBe at the
last instant. I blinked, I admit it). Then suddenly, at 2:18, a roar is heard
and there are nothing but bids to be seen, as price leaps from 1135 to 1150 in
less than 2 minutes, with "paper" (Goldman for example) selling big during the
run up. Compared to the October 15 event, this was a non-event, but
educational in so far as highlighting the contextual differences between the
two (and anything that demystifies the process is valuable). Unlike today's
action, the October 50 point 5 minute bar took everyone by surprise.
Consequently, no opportunity for a prefestivies repast of locale flambe.
Result: no inventory, no liquidity. I'm sure it's not this simple, but it
makes for a tidy explanation, doesn't it?
Comments/criticisms/ridicule welcome.
Incidently, most of the time I keep the box off. Too distracting.
Dave
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